dominating the 55+ market€¦ · 5 eastmark phoenix-mesa-scottsdale (mesa, az) dmb associates...
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DOMINATING THE 55+ MARKET: HOW THE HYPER-SUCCESSFUL
COMMUNITIES DO IT
NAHB International Builders’ Show (IBS) 2020
January 21, 2020
Brad Hunter, Managing Director
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 2
A LARGE SHARE OF THE TOP MPCS HAVE AA Top-25 as of Year-End 2019
RANK MPC MSA (CITY, STATE) DEVELOPER 2019 2018 % ∆
1 The Villages The Villages (The Villages, FL) The Villages 2,429 2,134 14%
2 Lakewood Ranch North Port-Sarasota-Bradenton (Sarasota, FL) Schroeder-Manatee Ranch, Inc. 1,648 1,482 11%
3 Summerlin Las Vegas-Henderson-Paradise (Las Vegas, NV) Howard Hughes Corporation 1,320 1,318 0%
4 West Villages North Port-Sarasota-Bradenton (Venice, FL) West Villages 1,273 1,108 15%
5 Eastmark Phoenix-Mesa-Scottsdale (Mesa, AZ) DMB Associates & Brookfield 1,011 929 9%
6 Nocatee* Jacksonville (Ponte Vedra, FL) PARC Group 928 938 -1%
7 Irvine Ranch** Los Angeles-Long Beach-Anaheim (Orange County, CA) The Irvine Company 850 1,160 -27%
8 Ontario Ranch* Riverside-San Bernardino-Ontario (Ontario, CA) Multiple Developers* 788 1,005 -22%
9t Cadence Las Vegas-Henderson-Paradise (Henderson, NV) The LandWell Company 753 481 57%
9t Daybreak Salt Lake City (South Jordan, UT) Daybreak Communities 753 575 31%
11 Sonterra* Austin-Round Rock (Jarrell, TX) Sonwest 741
12 Bridgeland Houston-The Woodlands-Sugar Land (Cypress, TX) Howard Hughes Corporation 734 482 52%
13 Inspirada* Las Vegas-Henderson-Paradise (Las Vegas, NV) Inspirada Builders LLC 640 717 -11%
14 Cane Bay Plantation Charleston-North Charleston (Charleston, SC) Gramling Brothers 628 474 32%
15 Stapleton Denver-Aurora-Lakewood (Denver, CO) Brookfield Properties 604 625 -3%
16 Verrado Phoenix-Mesa-Scottsdale (Buckeye, AZ) DMB Associates 602 558 8%
17 Great Park Neighborhoods Los Angeles-Long Beach-Anaheim (Irvine, CA) Five Point Communities 553 480 15%
18 Sunfield* Austin-Round Rock (Buda, TX) Scarborough Lane 550 316 74%
19 Tartesso* Phoenix-Mesa-Scottsdale (Buckeye, AZ) D.R. Horton 545 405 35%
20 Skye Canyon* Las Vegas-Henderson-Paradise (Las Vegas, NV) Olympia Communities 538 478 13%
21 Sienna Houston-The Woodlands-Sugar Land (Missouri City, TX) Johnson Dev. / Toll Brothers 517 544 -5%
22 Viera Palm Bay-Melbourne-Titusville (Melbourne, FL) The Viera Company 500 463 8%
23 Cross Creek Ranch Houston-The Woodlands-Sugar Land (Fulshear, TX) Johnson Development Corp. 484 455 6%
24 Harmony Houston-The Woodlands-Sugar Land (Spring, TX) Land Tejas / Johnson Dev. 481 425 13%
25 The Meadows* Phoenix-Mesa-Scottsdale (Phoenix, AZ) Communities Southwest 477 328 45%
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 3
WHAT WE’LL COVER TODAY…
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 4
POPULATION PROJECTIONS
0
5,000
10,000
15,000
20,000
25,000
30,000
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 100+
2030 2020
We will hit ‘Peak Boomer’ in 2035
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 5
WHAT, WHERE, AND HOW
RETIRING BOOMERS ARE CONSIDERING:► Where
» Communities with people who share their interests
» Suburban or walkable urban
» Sedentary and isolated, or active, social, and fulfilling
► What sort of home
» Downsizing
» Single-family, townhouse, condo, apt
► How they'll spend their time
» Desire to live a more enriched lifestyle in this next phase
NEW HOME / COMMUNITY TARGET MARKET IS THE SUBSET OF BOOMERS► About 25% - that are well off and healthy
► Some are retiring and value seeking
► Many are continuing to work full-time, or enjoying encore careers
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 6
LIFESTAGE EVENTS THAT PUT THEM IN THE MARKET
0% 10% 20% 30% 40% 50% 60%
Having a child or additional children
Recently married
Getting divorced
Adult (18+) family member moving in
Getting married
Rent increases
New job/move closer to work
Purchasing an investment property
Last child moved out (empty nest)
Purchasing a second home/vacation home
Preparing for retirement/Recently retired
55+
Preparing for retirement/recently retired
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 7
BOOMER MOTIVATIONS FOR POTENTIAL MOVE
1.7
2.4
2.5
2.8
3.1
3.2
3.5
3.7
0 0.5 1 1.5 2 2.5 3 3.5 4
Other
Increased social network
Better job / financial stability
More independence / less reliance on others
More me time
More money to spend on leisure/travel
A fuller life
Greater peace of mind
(NAHB 2015)Average rating; 1 = not a motivator, 5 = strong motivator
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 8
RETIREMENT PREFERENCES 55+
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
Affordability
House Features
Weather
Tax Benefits
CommunityFeatures
Proximity to Family
Proximity toFriends
Most Important
Source: RCLCO
Affordability, house features, weather, taxes, community features
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 9
THE MONTHLY NUT
IT ADDS UP► HOA
► CDD
► Mello Roos
► MUD
TAKE CARE THAT IT DOESN’T
SQUIRREL THE DEAL
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 10
ON TOP OF THE WORLDKen Colen, developer of the successful On Top of the World
(OTOTW) community near Ocala, Florida, which has experienced
30% sales growth year-over-year since 2014, says,
“A WIDE RANGE OF ONGOING SOCIAL
ENGAGEMENTS …”
“…OPPORTUNITIES FOR CONTINUING
EDUCATION AND LIFELONG
LEARNING.”
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 11
WHAT THEY’RE LOOKING FOR WITH NEXT PURCHASE
0% 10% 20% 30% 40% 50%
Want an investment property
Want a second home/vacation property
Want larger yard
Want larger house
Want higher quality home
Want lower maintenance home
Want smaller home
55+ households want smaller homes and less maintenance but still want a quality home
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 12
HOME BUYERS AND SELLERS BY GENERATION
0% 5% 10% 15% 20% 25% 30%
22 - 29 Millennials
30 - 39 Millennials
Gen X 40 - 54
Boomers 55 - 64
Boomer 65 - 73
Silent Gen 74+
Buyer Seller
Source: NAR 2019 Home Buyers and Sellers Generational Trend Report
32% of Buyers Are Boomers; 37% Are Millennials
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 13
HOME TYPE PREFERENCES
0% 10% 20% 30% 40% 50% 60% 70%
High-rise multifamily condominium flat (13 or more floors)
Mid-rise multifamily condominium flat (5 - 12 floors)
House with a separate suite or unit with own kitchen for mother,mother-in-law, adult child, or other (intergenerational home)
Low-rise multifamily condominium flat (Less than 4 floors)
Single-family attached, such as a townhome/plex
Single-family detached
What type of home are you seeking to buy? Check as many boxes as are relevant.
55+ 35-54 Under 35
Younger and older households more inclined toward higher-density options
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 14
DESIRED HOME SIZE DEPENDS ON AGE AS WELL
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Less than 1,000SF
1,000 - 1,499 SF 1,500 - 1,999 SF 2,000 - 2,999 SF 3,000 - 3,999 SF 4,000 - 4,999 SF 5,000 SF or more
Under 35 35-54 55+
More older households want smaller-to-medium sized homes, fewer want larger homes
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 15
RETIREMENT PREFERENCES OF 55+
0% 5% 10% 15% 20% 25% 30% 35% 40%
Resort area
Small town
Rural area
City with a mix of offices, apartments, and shops
City in a mostly residential neighborhood
Suburban area with mostly residential uses
Suburban area with a mix of houses, shops, andbusinesses
Source: RCLCO
Close to 80% prefer suburbs or outside a city
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 16
TOP COMMUNITY AMENITIES
Under 35 35-54 55+
1 Package receiving Gated entry Gated entry
2Fitness centers, such as weights, yoga studio, trainers, and
classesTrails
Fitness centers, such as weights, yoga studio, trainers, and
classes
3 Gated entryFitness centers, such as weights, yoga studio, trainers, and
classes
Art and culture, such as concerts, food, wine, art, educational
trips, etc.
4 Trails Resort pool (lounge) Trails
5 Resort pool (lounge) Package receiving Resort pool (lounge)
6Art and culture, such as concerts, food, wine, art, educational
trips, etc.
Art and culture, such as concerts, food, wine, art, educational
trips, etc.Package receiving
7 Farmers market Farmers marketVirtual services, such as community intranet, virtual education,
Amazon locker, etc.
8Sports courts, such as pickleball, bocce, basketall, sports fields,
tot lots, tennis courts, etc.Dog park Farmers market
9 Dog parkSports courts, such as pickleball, bocce, basketball, sports
fields, tot lots, tennis courts, etc.Lap pool
10 Pocket Park Pocket Park Dog Park
Art and Culture Grow in Importance for Older Market; Trails and Fitness Are Constants
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 17
STATE PREFERENCE FOR RETIREMENT (55+)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
NC
TN
GA
CA
FL
TX
USA
Where would you like to retire?
Florida Texas California Arizona Colorado
Georgia North Carolina Nevada Tennessee Hawaii
Maryland Virginia South Carolina Washington All Others
Florida, Texas, and California most popular destinations
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 18
AGE-RESTRICTED OR AGE-QUALIFIED PREFERENCE
0%
10%
20%
30%
40%
50%
60%
I would prefer a community of all ages, withno restrictions
I would prefer an age-qualified community(ages 55+)
I would prefer an age-qualified communitywithin a larger community of all ages
Older Boomer/Silent Gen Mid Boomer Young Boomer/Gen X
Source: RCLCO
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 19
WHAT TYPE OF AAC ARE YOU??
CONCEPT DESCRIPTION GEOGRAPHIC CONTEXT
PROMINENT
DEVELOPER EXAMPLES
Large Standalone
AAC
Suburban single-family homes for sale in an entirely age-restricted
community of 1,000+ units.
Large AACs require a lot of land, often over 500 acres; therefore,
these communities are often located in suburban areas with
abundant land availability.
• Del Webb
• Robson Ranch
• Shea Homes
AAC Enclave
Within Larger
MPC
Suburban single-family homes for sale in an age-restricted
enclave within a larger MPC with no age restrictions, where the
MPC as a whole consists of 1,000+ units.
Large MPC communities require a lot of land, often over 750
acres; therefore, these communities are often located in suburban
areas with abundant land availability.
• DMB
• Shea Homes
• Blenheim
• Taylor Morrison
Small AACs
Standalone or
Within Larger
MPC
Single-family homes for sale in an entirely age-restricted AAC with
less than 1,000 units in a suburban, urban, or small town setting.
Small AACs require less land and can therefore be located close
to small cities, historic downtowns, or traditional suburban areas.
A closer-in location often serves as an amenity.
• David Weekley
• Stephen Alexander Homes
• Nathan Carlisle
Resort AACs Destination-oriented single-family homes for sale in age-restricted
AACs, with an emphasis on regional recreational assets.
Resort AACs are co-located with recreational assets, such as
mountains, beaches, or large lakes to enhance the amenity
offerings and project a certain lifestyle image. Typically not located
in metro areas.
• Del Webb
• Shea Homes
• Jones Homes
AAC
Condominiums
Single-family attached units, or multifamily units in an entirely age-
restricted AAC of any size.
AAC condominiums can locate in both urban and suburban
settings. Denser development makes land planning more flexible.
• Beazer
• Verona Building Co
• Bill Sears
Rental
Multifamily AACs
Age-restricted multifamily rental apartments that are often in an
urban or semi-urban setting.
Greystar was an early mover; currently, they have over 20
communities in vibrant urban neighborhoods in major cities.
• Overture
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 20
THE VILLAGES – HOW THEY DID IT
CRITICAL
SUCCESS
FACTORS:
► Abundant activities – over 400 clubs
► Self-contained environment with retail and services – everything is golf cart
accessible
► Offer vacation packages that include a sample of the active adult lifestyle.
► Responding to concerns of retirees that their lives will change when they can no
longer drive a car, The Villages created a place where everything is accessible by
golf cart (plus self-driving cars).
► Have appealed to baby boomers (Baby Boomers Club has 400 members)
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 21
HOW ARE DEVELOPERS AND BUILDERS ADAPTING?
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 22
BUILDERS ARE MAKING ADJUSTMENTS
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2010 2011 2012 2013 2014 2015 2016 2017 2018
Annual Change in Home Size and Lot Size of New Homes Completed
Median Home Size (SF) Median Lot Size (SF)
Homebuilders are beginning to address demand for smaller housing
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 23
CAPTURING UNMET POTENTIAL DEMAND
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
<$300K $300-450K $450-759K $750K+
Home Price Distribution of New Home Sales, Potential MPC Buyers, and Supply in Top MPCs
Actual New Home Sales Potential MPC Buyers Supply in Top MPCs
Note: “Top MPCs” includes 39 of 2018’s top 50 MPCs; “Potential MPC Buyers” includes prospective buyers who would consider an MPC
Source: U.S. Census Survey of Construction; RCLCO
Attainability is a big challenge; many potential MPC buyers seek homes under $300,000; more MPC housing is $300,000+
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 24
CAPTURING UNMET POTENTIAL MPC DEMAND
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
<$300K $300-450K $450-759K $750K+
Home Price Distribution of New Home Sales, Potential MPC Buyers, and Supply in Top MPCs
Actual New Home Sales Potential MPC Buyers Supply in Top MPCs
Missed opportunity at
MPCs
Note: “Top MPCs” includes 39 of 2018’s top 50 MPCs; “Potential MPC Buyers” includes prospective buyers who would consider an MPC
Source: U.S. Census Survey of Construction; RCLCO
Consumers are finding new homes outside of MPCs under $300,000; product diversity could improve this for MPCs
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 25
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 26
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 27
THE COMMON THREAD
THE KEYS TO BECOMING A
DOMINANT MPC IN GENERAL SEEM
TO BE: ► Segmentation
► Lifestyle Amenities
► Diverse Audience and Product
► Differentiation Versus Resales (USP)
► Active-Adult Section in a Larger MPC
Common Features
Segmentation
Lifestyle Amenities
Diverse Audience and
Product
Differentiation Versus
Resales (USP)
Active-Adult Section in a Larger MPC
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 28
A HOME-IMPROVEMENT
TREND …
“AGING IN
PLACE”
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 29
TECH WILL SHAPE CHANGES IN HOW PEOPLE LIVE► Telecommuting
► Package Delivery
► Self-Driving Cars
► Work Share
► PropTech
► Virtual Tours
► Make selling home easy
(e.g. Offerpad)
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 30
DISCLAIMERS
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 31
CRITICAL ASSUMPTIONSOur conclusions are based on our analysis of the information available from our own sources and from the client as of the date of this report. We assume that the information is correct, complete, and reliable.
We made certain assumptions about the future performance of the global, national, and local economy and real estate market, and on other factors similarly outside either our control or that of the client. We analyzed trends and the information available to us in
drawing these conclusions. However, given the fluid and dynamic nature of the economy and real estate markets, as well as the uncertainty surrounding particularly the near-term future, it is critical to monitor the economy and markets continuously and to revisit
the aforementioned conclusions periodically to ensure that they are reflective of changing market conditions.
We assume that the economy and real estate markets will grow at a stable and moderate rate to 2021 and beyond. However, stable and moderate growth patterns are historically not sustainable over extended periods of time, the economy is cyclical, and real
estate markets are typically highly sensitive to business cycles. Further, it is very difficult to predict when an economic and real estate upturn will end.
With the above in mind, we assume that the long-term average absorption rates and price changes will be as projected, realizing that most of the time performance will be either above or below said average rates.
Our analysis does not consider the potential impact of future economic shocks on the national and/or local economy, and does not consider the potential benefits from major "booms” that may occur. Similarly, the analysis does not reflect the residual impact on
the real estate market and the competitive environment of such a shock or boom. Also, it is important to note that it is difficult to predict changing consumer and market psychology.
As such, we recommend the close monitoring of the economy and the marketplace, and updating this analysis as appropriate.
Further, the project and investment economics should be “stress tested” to ensure that potential fluctuations in revenue and cost assumptions resulting from alternative scenarios regarding the economy and real estate market conditions will not cause failure.
In addition, we assume that the following will occur in accordance with current expectations:
► Economic, employment, and household growth
► Other forecasts of trends and demographic and economic patterns, including consumer confidence levels
► The cost of development and construction
► Tax laws (i.e., property and income tax rates, deductibility of mortgage interest, and so forth)
► Availability and cost of capital and mortgage financing for real estate developers, owners and buyers
► Competitive projects will be developed as planned (active and future) and that a reasonable stream of supply offerings will satisfy real estate demand
► Major public works projects occur and are completed as planned
Should any of the above change, this analysis should be updated, with the conclusions reviewed accordingly (and possibly revised).
NAHB International Builders’ Show (IBS) 2020 | 1/21/2020 | 32
GENERAL LIMITING CONDITIONSReasonable efforts have been made to ensure that the data contained in this study reflect accurate and timely information and are believed to be reliable. This study is based on estimates, assumptions, and other information developed by RCLCO from its
independent research effort, general knowledge of the industry, and consultations with the client and its representatives. No responsibility is assumed for inaccuracies in reporting by the client, its agent, and representatives or in any other data source used in
preparing or presenting this study. This report is based on information that to our knowledge was current as of the date of this report, and RCLCO has not undertaken any update of its research effort since such date.
Our report may contain prospective financial information, estimates, or opinions that represent our view of reasonable expectations at a particular time, but such information, estimates, or opinions are not offered as predictions or assurances that a particular level
of income or profit will be achieved, that particular events will occur, or that a particular price will be offered or accepted. Actual results achieved during the period covered by our prospective financial analysis may vary from those described in our report, and the
variations may be material. Therefore, no warranty or representation is made by RCLCO that any of the projected values or results contained in this study will be achieved.
The report and any associated documentation prepared for the client remain the property of RCLCO, including data used in the preparation of this report, the methodologies employed by RCLCO, any graphic design images and exhibit formatting visualizations
and content. RCLCO gives Client a perpetual, royalty-free, fully paid up license to use the report, included images and exhibits and exhibit content. Client may use the report in any manner or share it with others subject to the indemnification clauses below
AUSTIN LA ORLANDO DC
221 W 6th St
Suite 2030
Austin, TX 78701
11601 Wilshire Blvd
Suite 1650
Los Angeles, CA 90025
964 Lake Baldwin Ln
Suite 100
Orlando, FL 32814
7200 Wisconsin Ave
Suite 1110
Bethesda, MD 20814
Brad Hunter, Managing Director
P: (561) 573-8351
W: RCLCO.COM